Trade imbalance, heavy goods, and pollution

Jungho Lee, Shang-Jin Wei and Jianhuan Xu

Journal of International Money and Finance, 2024, vol. 144, issue C

Abstract: We propose a new welfare effect of trade surplus. Guided by insight from several fields in economics, we provide evidence that an increase in a country's trade surplus alters the unit shipping costs for its trade and the composition of its imports in ways that induce more pollution in the country in equilibrium. This new form of welfare loss of trade imbalance has not been accounted for in the existing international economics literature.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:144:y:2024:i:c:s0261560624000779

DOI: 10.1016/j.jimonfin.2024.103090

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